Morning Report – Pending home sales 6/30/14

Vital Statistics:

 

Last Change Percent
S&P Futures 1951.4 -0.6 -0.03%
Eurostoxx Index 3231.3 3.4 0.11%
Oil (WTI) 105.4 -0.3 -0.28%
LIBOR 0.231 -0.004 -1.66%
US Dollar Index (DXY) 79.99 -0.054 -0.07%
10 Year Govt Bond Yield 2.52% -0.02%
Current Coupon Ginnie Mae TBA 106.8 0.1
Current Coupon Fannie Mae TBA 106.1 0.1
BankRate 30 Year Fixed Rate Mortgage 4.14

 

Stocks are flat this morning on no real news. Bonds and MBS are flat.
Pending Home Sales increased 6.1% month-over-month in May, according to the NAR. All four regions experienced gains with the Northeast and the West experiencing the biggest gains. First time homebuyers accounted for 27% of new sales. Again, most of the action has been at the higher price points, while sales for homes under 250k are actually down 10%. Meanwhile, apartment rents are expected to increase 8% over the next few years.
The ISM Milwaukee index fell to 60.57 from 63.49 the previous month. The Chicago Purchasing Manager’s Index also fell.
This week promises to be full of economic data, but it is a short week. Friday the market will be closed and I believe FINRA is recommending an early close for the bond market on Thursday. So expect a flurry of activity on Thursday after the jobs report and then a dull market as most of the Street will be on the L.I.E. by noon.
RealtyTrac has sliced and diced the data on distressed discounts. As expected, vacant properties take a big hit – in the 25% range, but bank-owned properties overall sold at a 3 percent premium on average. That said bank-owned vacant properties still had a deep discount.
Freddie Mac has its mid year economic update and forecasts. They expect GDP to grow at 3% over the next couple of quarters. Home prices are expected to rise 5% this year and sales are expected to be just shy of 5.5 million units.
Most people have noticed the rally in US Treasuries, but have not been focusing on the rally in emerging market debt. The BIS is worried about a potential bubble brewing in sovereign debt markets worldwide. The BIS distinguishes between financial cycles (which last 15-20 years and are characterized by debt and asset prices) and business cycles, which last 1 – 8 years. According to BIS, we have just bottomed from our financial cycle, and are finally on the upswing.

Note to ATiM-ers.  I will be in the belly of the beast (DC) early next week, if anyone wants to get together for drinks / dinner…

27 Responses

  1. FYI, I need 25 paid vials to make my quarterly nut. Start procreating.

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  2. That Union ruling is gonna leave a mark.

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    • jnc (from your link):

      And railroads were a natural monopoly too, right?

      Yeah, if you were laying rail between say, New York and Chicago, it was very expensive. So to have two different competing lines running between New York and Chicago didn’t necessarily make sense from a social point of view, certainly not initially, when there was very little steel rail in the country. So, railroading was widely viewed as a “natural” monopoly. The problems arose when the powers in that monopoly were left unregulated, and powerful people like Rockefeller and Carnegie used those natural monopolies to capture control of other businesses that had to ride the railway to get to the market.

      This is just plain wrong. The railroad monopolies were both created and maintained through government subsidies, land grants, and legislation barring competition. The fact that he frames it in terms of what made sense “from a social point of view” ought to set alarm bells off that government was involved. They were coercive monopolies, not natural monopolies.

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  3. Apparently, I can force union members to have abortions.

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  4. For yello, mom amour.

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  5. I would also add that the government has tried to block deals only to lose in court (Wild Oats / Whole Foods)

    That said, the last aggressive FTC head was Pitofsky

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    • A black guy named Clinton Tucker is apparently offended by Benjamin Moore Paint because it has two colors named Clinton Brown and Tucker Chocolate.

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      • Tweet from the White House:

        RT if you agree: Women—not their bosses—should be able to make their own health care decisions. #HobbyLobby #NotMyBossesBusiness

        I don’t know which is worse, the fact that the White House has so much contempt for the intelligence of its supporters that it thinks such blatant propaganda will be effective, or that there actually is a significant audience of O-supporters that find such tripe compelling.

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  6. Scott, what I found most interesting was the commentary about Taft vs Roosevelt vs Wilson and the analysis that progressives often prefer monopolies that are in turn controlled by the government vs actual competition.

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  7. “The railroad monopolies were both created and maintained through government subsidies, land grants, and legislation barring competition. ”

    & probably the use of eminent domain as well.

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  8. The left consistently conflates “access” with “forcing someone else to pay for it.”

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  9. ace’s theory is that’s the WH is reduced to winning the hastag of the day. hard to say he’s wrong.

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  10. #NotMyBossesBusiness

    then what idiot built on the employer sponsored system. oh.

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  11. My favorite.

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    • Exactly what I have been saying for a long, long time:

      A growing crisis in our constitutional system threatens to fundamentally alter the balance of powers — and accountability — within our government. This crisis did not begin with Obama, but it has reached a constitutional tipping point during his presidency. Indeed, it is enough to bring the two of us — a liberal academic and a conservative U.S. senator — together in shared concern over the future of our 225-year-old constitutional system of self­governance….

      First, we need to discuss the erosion of legislative authority within the evolving model of the federal government. There has been a dramatic shift of authority toward presidential powers and the emergence of what is essentially a fourth branch of government — a vast network of federal agencies with expanded legislative and judicial power. While the federal bureaucracy is a hallmark of the modern administrative state, it presents a fundamental change to a system of three coequal branches designed to check and balance each other. The growing authority invested in federal agencies comes from a diminished Congress, which seems to have a dramatically reduced ability to actively monitor, let alone influence, agency actions.

      The only point they fail to make is the obvious…this “fourth branch” is entirely unconstitutional.

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      • More indications that Elizabeth Warren is either dumb as a box of rocks or a lying sack of shit. From her twitter feed on the Hobby Lobby decision:

        Can’t believe we live in a world where we’d even consider letting big corps deny women access to basic care based on vague moral objections

        The sentence is filled with untruths.

        “we live in a world” – The decision applies to our nation, not the world.

        “letting big corps deny women basic care” – Hobby Lobby isn’t “denying” anything to anyone. Any woman who wants “basic care” is free to go get it.

        “based on vague moral objections” – The objection is actually quite explicit. The objection is to the purchase and use of drugs designed to put an end to a life that has already been conceived.

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        • Warren is a truly awful human being. And a committed enemy of American citizens.

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  12. you have to read the @SCOTUSblog timeline. it’s hilarious.

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  13. Who hasn’t? AmIRight?

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  14. I read that Warren tweet like a movie voiceover. that “in a world” trailer guy.

    also, “in a world” is decent indie flick about movie voice over work.

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  15. What you expect from a fake Indian woman?

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  16. @Brent: “The left consistently conflates “access” with “forcing someone else to pay for it.”

    Quoted for truth.

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  17. @ScottC: “Women—not their bosses—should be able to make their own health care decisions.”

    That’s just freaking amazing. Don’t let the Whitehouse Interns control your Twitter accountant. If that tradition is maintained, the next Republican president (or, more accurately, one of his Whitehouse Interns) will provide a lot of fodder for Jon Stewart.

    “Honey, I would have sex with you tonight, but my boss said I shouldn’t.”

    “I’m sorry, Mrs. Smith. I just called your boss, and he said not to give you any antibiotics. I’m afraid my hands are tied.”

    If only there were other retail jobs in stores within a reasonable distance of any given Hobby Lobby. Oh, wait, there are, pretty much everywhere.

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  18. @ScottC: “Tucker is seeking damages for discrimination, retaliation and a hostile work environment.”

    I think Clinton Tucker made his work environment hostile. So he’s definitely right on that point. As for the rest, he’s clearly a nutball. It’s an unfortunate coincidence. “Purported” origins of the names: I like that. There is a clear genesis of the names not at all based on his name, so it’s “purported”. No, it’s “despite the obviously non-racial, non Clinton Tucker origin of the names, he wants to sue his former employer because he’s a difficult racist asshole.”

    Good luck to him. Hope he gets tried in the 9th circuit, he might win, there.

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  19. @ScottC: “This is just plain wrong. The railroad monopolies were both created and maintained through government subsidies, land grants, and legislation barring competition.”

    Truth. I can think of one natural monopoly off the top of my head: satellite radio. The market is too small and the barrier to entry far too expensive to justify a large number of competitors. Otherwise, most markets abhor monopolies, unless falsely constrained via government collusion. Usually accomplished via right-of-ways and land grants, as with the rail roads.

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  20. That looks to be a weak example, Kevin. First of which being that there were Sirius and XM Radio to start. The barrier to entry relates to the cost of launches and satellites, which are not fixed. A new entrant doesn’t have to use up any physical terrain.

    There are some fairly decent examples of what might be considered “natural” monopolies. Utilities are the classic example. While it might be technically possible for multiple electric or water utilities to exist, do you really want several companies sending wiring throughout the neighborhood?

    I managed to avoid the current duopoly for internet access in my area. One cable company provides access; Verizon provides DSL (but requires you to spend $40/month on phone service and refuses to bring FiOS to my area). We went with Clear Wire. At $50/month, it cost less and I don’t want local phone service or cable. Then Sprint picked up ClearWire, which has discontinued new service. Fortunately, we’re grandfathered in. For the moment.

    BB

    Like

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